Go! Go! Go!

George Freeman was elected MP for Mid Norfolk in 2010 after a fifteen year career in start-up venture capital in the technology sector. He worked closely with the Chancellor’s office in Opposition on the Richards and Dyson Reports reviewing innovation and business support policies, and is contributing to the Growth Review.

There can be no more urgent priority than unlocking growth. The outcome of the Coalition’s entire programme will ultimately depend on whether we get the growth we need. The result will determine whether Britain continues down the trajectory to being a depressed, old, debt-ridden, public sector economy or a vibrant place of hope able to compete successfully in an extraordinarily dynamic global enterprise economy. These are high stakes indeed.

What can Government do when it hasn’t got any money? Because that is the challenge baffling Westminster politicians. The lesson that Govnt cant 'buy' sustainable economic growth laid bare in the Blair Brown years is one the Red Eds appear not to have learnt.

The Chancellor’s bold deficit reduction strategy is an essential step in the right direction, as are the NI and Corporation tax measures to help business. But they are first steps. We must go further, faster, harder. The Coalition has shown admirable appetite for reform. Let’s channel more of its reforming zeal into removing the barriers to growth instead of tinkering with our voting system. The public will not thank us for obsessing about A.V. when real incomes are falling.

To really deliver the vision of a Britain 'Open for Business' again, I believe, as someone who has come to politics from business, that we need to learn some lessons from business. So now that we’ve issued the profits warning, slashed the dividend and reorganized the management, what should the board of UK plc be doing to unlock new revenues?

Nadhim Zahawi is MP for Stratford on Avon and a member of the Business Innovation and Skills Select Committee. This is an edited version of remarks he gave at Monday's 'Going for Growth' conference, hosted by ConservativeIntelligence.

The government needs to do something to create growth appears to be the overwhelmingly clear message coming from all quarters. But exactly what that “something” needs to be and how that fits with what the government is already doing, doesn’t appear to be quite so obvious.

“We need a growth strategy” says one group, “the Chancellor needs to lay out what the economy will look like in the future” says another, “the BIS department is failing to deliver a growth agenda” claims Her Majesty’s opposition, but again no one seems able to say what this should be and exactly where the government is failing.

Why? Because growth isn’t something that happens because you implement a policy, it’s as much about creating confidence for businesses as anything else. If business has no confidence then it’s not likely to invest to grow or to take on new employees. Therefore creating growth has to fundamentally be about how we create an environment in which businesses are confident enough to grow. In reality it’s as much about where we leave businesses alone as where we as government intervene.

So here are my suggestions to Ministers for growth - you could call them my 3Rs:

RegulationSpeak to any businessman or woman and they will tell you that over regulation stifles growth. This is why one of the first policies implemented by the Coalition was one-in, one-out on business regulation and a review of all business regulations across all departments.

Lord Flight is a former Shadow Chief Secretary to the Treasury and Deputy Chairman of the Conservative Party, who is now chairman of Flight & Partners Recovery Fund.

There is an obvious need for the private sector of the British economy to recover and grow faster to take up the slack in the economy; to employ more young people coming onto the job market as well as those released from the public sector; and to recover and grow tax revenues to help restore the public finances.

But there are difficult answers as to what government can and should do. The fundamental economic parameters are that the country – both individuals and government – have been “living beyond their means” for some time. For a while stagnant or even declining personal consumption is inevitable. This is being reinforced by the increase in costs, particularly energy (also driving up all costs) in an employment environment where pay and particularly take home pay, after tax, will not keep pace with consumption costs. This means a reduction in living standards for the time being. Only when the economy eventually starts to recover more strongly is there the risk of “catch up” increases in pay, driving an inflationary spiral.

In the interim, private sector growth has to come from increased exports and increased capital investment. The supporting macro-economic policies are obvious – a competitive exchange rate, cheap and easy money and a favourable tax regime.

There is, in addition, the difficult, but correct issue raised by Allister Heath of City AM, that there has not yet been the “economic cleansing” which needs to happen, as a harbinger of sustained economic recovery. Too many businesses are being kept afloat by banks not calling in their loans and by the Government itself extending credit by the back door, in terms of VAT and PAYE owing, amounting to at least £30 billion. The extent of business failures in this recession, which has been much more serious than the recession in the early 1990s, is still much less than was the case in the early 1990s. I think Allister Heath is fundamentally right here, but with the qualification that if left “wholly to the markets” many worthwhile businesses would go under, which with a bit of financial support to keep them alive could flourish in the future – particularly in high tech areas. The challenge is to identify which are worth sustaining.

The standard sort of proposals turned out by the Civil Service of designating particular areas to be exempt from NI increases, or enjoying other forms of fiscal benefit, seek to address the political need for the Government to be seen to be doing something, but in the aggregate tend to be a waste of time.

The fundamental issue is as to what should be the balance between cutting public sector spending and raising taxes in order to restore the public finances and head off the risk of borrowing problems and, ultimately, national bankruptcy.

Mark Littlewood is Director General of the Institute of Economic Affairs. This is an edited version of remarks he gave at yesterday's 'Going for Growth' conference, hosted by ConservativeIntelligence.

Going for growth is the key challenge for the Coalition. In fact, pretty much all their eggs are in the growth basket. If GDP does not show a marked and impressive upward swing over the coming years, then the government’s overall strategy becomes much considerably harder to realise.

You can still start to get the deficit under control in a zero growth world. You can still encourage an upsurge in volunteerism in a Big Society. You can still attempt some structural reforms of our antiquated health and education systems. But these things become a whole lot easier – or at least considerably less difficult – if you’re witnessing 3% growth in the economy, rather than dealing with flatlining GDP figures which may even have been tipped into the negative because of a bad bout of snow.

Frustratingly, the government has turned to the “growth agenda” rather late. Fiscal retrenchment and the Big Society have been the consuming themes of the Coalition’s first nine months.

They’ve talked a big game on deregulation, Nick Clegg’s Freedom Bill was supposedly going to be the most substantial recalibration of the relationship between the individual and the state since the 1832 Reform Act. When it finally emerged last week, despite containing a raft of basically welcome proposals, it is doubtful it will even be considered the most substantial recalibration of the individual and the state to take place this year.

In some areas, they’ve stemmed the flow of anti-enterprise regulation, The “one in, one out” approach has helped, but has hardly led to a rolling back of the vast amount of red tape which hampers business. One can only hope this will follow in due course.

Julian Wolfson (left) has worked in government, commercial and voluntary sectors. Tim Bond works is an investment strategist. They work at Odey Asset Management.

The economic cycle puts wind in our sails. Growth is a fact. The Government’s deficit stance has bought the UK time, and despite real risks UK plc is moving faster than people think. Look through the impact of winter weather on the economy and annual GDP growth is above 2%, probably higher than the rest of Europe. This is welcome, but only as far as it goes, and only for 2011.

The Spring Budget should launch a policy for growth beyond 2011 and set out a two-term agenda to deal with the weaknesses and seize the opportunities on offer.

We face two key long term economic risks. First, the risk derived from excessive debt, particularly government debt. This is something the public is starting to understand. Second, there is resource price inflation risk, driven by the developing economies’ surging appetite for raw materials and the other building blocks of modernisation.

The debt is so big that the UK cannot afford – has no room to manage - recession. Were we to have an unexpected downturn in 2012 it is questionable whether government finances would allow the normal operation of automatic stabilisers, let alone additional fiscal stimuli. The cupboard would be bare.

Recession would mean ‘soft’ default on external creditors through currency falls, and domestic default on the covenant the British have with their government. A series of actions would trigger in which successive, toppling governments would endeavour to make ends meet through welching on everything from free NHS treatment to help for the old, the weak and the young. We HAVE to get growth now and at any cost other than a rising deficit. Even at the cost of inflation.

The second problem, inflation, is more complex. Neither simply good nor simply bad, it is both risk and opportunity. Nor is it under our control when it is inflation which we import.

David Cameron’s conference speech was a missed opportunity. He should have used it as an opportunity to move beyond the furore over child benefit and the grim talk about cuts, and lay out a positive, pro-growth agenda for the Coalition Government. Instead, we got more talk about the Big Society – an interesting and important issue, to be sure, but not one that gets to the heart of our immediate problem: how do we get the British economy moving again?

The funny thing is that a pro-growth agenda – a programme designed to boost the private sector, to create sustainable new jobs, and to drive an economic recovery – is a necessary counterpoint to so many other things the government wants to do. Take welfare reform. It is admirable that the Government is addressing the perverse incentives against work that riddle the current system, and it is great that the energy and expertise of independent organisations is to be harnessed to get people back into employment. But how successful can these reforms be if new jobs are not being created, and the economy continues to stagnate?

The same is true of the Coalition’s flagship policy – to eliminate the deficit by 2015-16. If you look at the numbers in the emergency budget, which are due to be fleshed out in the Comprehensive Spending Review tomorrow, there is just no way that the Government’s spending cuts will balance the books on their own. Without economic growth and correspondingly higher tax revenues, the Government won’t even get close to its target.

So where should they start? The tax system is the obvious place, and here at least there have been some positive moves. George Osborne’s pledge to progressively cut the headline rate of corporation tax, so that the UK has the lowest rate in the G7 and the fifth lowest in the G20, is an impressive one that should help Britain attract more investment and discourage footloose multinationals from fleeing to more business-friendly jurisdictions.

But cutting corporation tax is not the be-all and end-all of pro-growth policy.

Businesses are the key to a strong economic recovery, but they are being strangled by red tape. They must devote a large share of their resources to complying with regulations rather than engaging in the entrepreneurship that creates wealth. Under New Labour, the regulatory burden has increased substantially. It is extremely difficult to measure the costs of that red tape, but, in one field - the costs of tax collection - there has been serious work. There are huge and increasing costs imposed by Britain’s incomprehensible tax system.

Gordon Brown’s years of tinkering have introduced more and more complexity. The UK now has the longest tax code in Europe. A new Institute of Economic Affairs study, Taxation and Red Tape, reveals that there are 8,300 pages of primary tax legislation in Britain, compared with 1,700 in Germany and 1,300 in France. Indeed, we probably have the longest tax code in the world outside India - which is, of course, notorious for its bureaucracy. The average Finance Act since 2000 has been three times as long as the average Finance Act in the 1980s – a damning indictment of New Labour’s record.

As a result, the compliance and administration costs of taxation have now reached a staggering £15-20 billion per year – equivalent to the government’s entire transport budget. And Britain is losing ground to her competitors. The UK is one of only 3 out of the 43 most advanced economies where the costs of tax collection are not falling.

Sajid Javid is a businessman and private investor. He was previously a senior Managing Director at Deutsche Bank AG. In this Platform he argues that the current wave of state intervention must not be permanent, and that Anglo-Saxon capitalism is essential for our prosperity and liberty.

Every Christmas I attend a reunion of old school friends from Bristol. The talk often turns to politics, as my friends know my interests all too well. This year, after a bout of banker bashing, one friend stated: “capitalism is dead!”. Admittedly, by this time my friends had consumed a few drinks, but it still startled me to see others nodding their heads.

Upon reflection, who can blame them? It’s what they see. We have nationalised much of our banking industry. Government spending has rocketed. Taxes are up. Regulation is back. Class war is encouraged.

Capitalism is in a good deal of trouble. State intervention, control and ownership - in the UK and beyond - is back in fashion. But over the past 150 years, capitalism has more than proved its worth. The parts of the world where it has been let loose have flourished; the parts where it has been held back have languished.

The importance of capitalism is not just driven by economics. A critical reason why capitalism has been such a success is that its sits well with human nature – our desire for liberty and prosperity. Communism eventually collapsed because it relied on a total restriction of individual freedom to survive. It murdered millions just to avoid criticism.

As long as people want to improve their living conditions, earn more than their parents did, own their own home and car, go on holiday, travel the world and buy cool, but perhaps even useless, things, they will need a mechanism that allocates scarce resources far more efficiently than a repressive state. Capitalism is not perfect, but if you want prosperity and genuine freedom, it is essential.

Gurmaj Dhillon is a former Treasury official who recently served as an
adviser to the Conservatives on police reform and youth justice policy.
He is on the Conservative approved parliamentary candidates' list.

In this article I will seek to make the case that:

An ‘early and greater’ approach to fiscal consolidation is needed to restore the public finances back to health;

We should adopt a two-pronged approach: re-focusing public spending towards frontline public services; and applying the concept of GDP-targeting to public spending, while redefining the provision of welfare support; and

This approach should help to manage risks both around the process of economic recovery and the UK’s sovereign debt rating.

The political debate on how to restore the public finances back to health has largely focused on the timing and scale of reductions in public spending on one hand, and measures to stimulate private enterprise on the other. This has driven scrutiny of activity, headcount and pay across the public sector and publicly-funded bodies, and barriers to business growth and job creation in the private sector.

Advocates for ‘earlier and greater’ intervention on public spending (including the Conservatives) argue that this approach will help to both reduce the growing burden of public debt and stimulate private enterprise through reductions in corporate taxation (accompanied by a deregulatory agenda). Proponents of ‘later and gradual’ intervention (including Labour) point to the fragile nature of the anticipated recovery, arguing that shortfalls in banking credit and private consumption require that that government maintains demand in the economy, as individuals and businesses repair their respective balance sheets.

Christine Emmett has a degree in Economics, is a member of William
Hague’s Northern Transport Commission, Vice Chairman of the Biz Club
and runs her own company advising on major infrastructure projects. She is on the approved list of Conservative parliamentary candidates.

The owner of a coffee bar in my local town donated £4,000 to the high school so that they could buy Astroturf for the football field.

The Conservatives would be well advised to look after businesses such as this. They are the backbone of local towns and villages. Their owners do not need the title ‘social entrepreneur’ to understand their responsibilities, support communities, provide employment and yes, even set standards of probity and integrity. Small communities have a way of monitoring performance more effectively than any quality system. No-one re- visits the hairdresser who has a reputation for dying your hair purple (unless, of course, that’s your wish!)

According to the Federation of Small Businesses, there are 6,000 such businesses in each constituency. Over half of all Britain’s employees work for the 4 million small- and medium-sized businesses. To win their trust, we must convince them that we understand them and will support the survival and development of their business.

Small businesses are bearing the brunt of recent problems in the economy. At a small business awards ceremony last week the talk was of worse to come:

The owner of an antiques shop built his business up over the past 10 years and has been burgled 8 times recently. The police have still not found the culprits.

Last year a firm of solicitors gave its staff a stark choice – take 30% cut in salary or redundancy. Most chose to stay.

Shane Frith is director of the classical-liberal think-tank
Progressive Vision. He has worked for Conservative MPs in the UK and
National Party MPs in his native New Zealand. He is a former chairman
of the International Young Democrat Union, linking young people
involved in centre-right political parties worldwide, including the
Conservative Party.

This is the first in an occasional series of articles exploring the need for a pro-economic growth policy agenda.

Last year, the chairman of the BMA accused government health “reforms” of attempting to make hospitals operate like supermarkets. I responded at the time that we wished the NHS operated more like supermarkets on the grounds that supermarket customers can buy a wide and diverse range of products, at very reasonable prices and can expect minimal queues or waiting times to get what they want.

Yet, despite the success of Britain’s supermarkets in delivering good service and great products at a fair price, it remains common practice to attack supermarkets – including from prominent members of the Conservative Party. Primarily the call is for government regulation to limit the ability of supermarkets to open new shops and, perversely, to force supermarkets to weaken their negotiating position with certain suppliers.

The farming lobby, not content with living off taxpayer subsidies, has been very effective at complaining that supermarkets negotiate too hard. Well, diddums! If Tesco negotiates hard with a Chinese manufacturer of widgets, we wouldn’t criticise them. If Waitrose drives a hard bargain with a New Zealand wine supplier, we don’t hear them crying into their Chardonnay. The free market is competitive and this is the world supermarkets inhabit.

Tesco may be at the top of the tree today with a 31 per cent market share, up from 21 per cent in 1998, however the next decade could see them following Morrison’s fall of over 14 per cent since 1998. There would be no bailouts (I hope!) and little chance of an EU subsidy. If a supermarket fails to respond to technological change or a new competitor, they can close. As a supermarket customer, I hope they negotiate hard with farmers and pass on some of the savings to me – and if they don’t I’ll go to a competitor.